* Q2 net profit up 13 pct on forex gains
* CEO says bank sticks to strategic goals
* Bank will focus on cost controls, bad loans (Adds details, quotes, background)
By Katya Golubkova and Oksana Kobzeva
MOSCOW, Aug 28 (Reuters) - Sberbank, Russia's biggest lender by assets, will focus on costs and loan quality as it endeavours to hit targets set under its five-year strategic plan in spite of a weakening Russian economy also feeling the effects of Western sanctions.
The state-controlled bank is an important lender to Russia's $2 trillion economy but is grappling with a weaking economic outlook and capital flight in the wake of the sanctions in response to the country's policy towards Ukraine.
Sberbank expects Russia's economic growth to be "close to zero" this year, Chief Executive German Gref said, compared with the Economy Ministry's official forecast of 0.5 percent growth.
The Russian stock market and the rouble fell further on Thursday as Ukraine accused Moscow of sending troops to support rebels in eastern Ukraine, raising the possibility of a new round of sanctions.
Sberbank is one of five Russian banks subject to sanctions banning all European Union nationals and companies from buying or selling new bonds, equity or other financial instruments they issue with a maturity of more than 90 days.
Gref, a former Economy Minister, said in a conference call that sanctions have had some negative effect on the bank, both in terms of business and its ability to raise capital.
"But I can't say yet that it had a significant influence on our business - these are more moral loses," Gref said, adding that he is trying to rebuild the bank as a modern and transparent business while sanctions are "barriers blocking growth".
Last November Sberbank unveiled an ambitious target of doubling its assets and earnings by 2019 through increased lending to consumers at home while developing its existing network of businesses abroad.
"We remain optimistic over our ability to reach all our strategic goals and I think we will not turn away from this path," Gref said.
LIMITED STATE COFFERS
Sanctions can benefit large Russian banks in the short term as borrowers turn to domestic lenders amid closed international markets. But that holds true only as long as the banks have access to state support to replenish capital and provide liquidity.
Such support could become increasingly difficult to come by, with a growing number of Russian companies asking for help from the country's limited state coffers.
Sberbank reported 11 percent growth in retail loans and a 9 percent rise in corporate lending in the first six months of the year, partly thanks to large clients turning to domestic banks after a spike in Western interest rates since the beginning of the Ukraine crisis.
Gref said he expected a slowdown in consumer lending and "moderate" growth in corporate lending across the sector but added that the bank will sharpen its focus on cost control and non-performing loans (NPL).
Sberbank's NPLs were 3.4 percent of total lending at June 30, up from 2.9 percent at the end of last year. The bank's cost-to-income ratio, meanwhile, improved to 41.7 percent from 45.8 percent.
The bank said that second-quarter net profit rose 13 percent to 97.5 billion roubles ($2.7 billion), beating analyst forecasts, partly thanks to revenues from foreign exchange operations.
"The forex market volatility supported the bank's earnings ... as well as solid cost control," Gazprombank analyst Andrei Klapko said.
Forex operations contributed 10.1 billion roubles to the bank's profit.
Sberbank's loan-loss provisions stood at 73.8 billion roubles in the second quarter, up from 30.9 billion roubles a year ago, while its Tier 1 capital adequacy ratio was at 10.5 percent, down 10 basis points from the start of the year. (1 US dollar = 36.6320 Russian rouble) (Additional reporting by Vladimir Soldatkin; Editing by David Goodman)